Back in October 2010, the Department of Labor (DOL) proposed several regulations that broadened the definition of who is considered a fiduciary under theEmployee Retirement Income Security Act (ERISA). The main reason why the DOL wants to change the definition of fiduciary as it relates to ERISA is because the definition has not changed since ERISA was enacted in 1974, and the current retirement marketplace has changed.
However, the main issues people have with the proposed changes are that the definition is too broad and the changes could become very costly. The proposed changes have even managed to have both Democrats and Republicans in Congress agree and state concerns over the changes. Both sides believe it should be proposed again. The opponents believe that the changes will include advisors as fiduciaries who should not have fiduciary responsibility based on the service they are providing. The rule change could face significant legal challenges if it is ever enacted.
The DOL has defended its proposed changes, stating that the current definition is too narrow and has damaged plans, participants and IRAs. The DOL has stated that broadening the definition to include anyone who provides investment advice to pension funds for some type of compensation is the original intent of ERISA.
The battle does not appear to be drawing to an end any time soon. However, as it currently stands, the proposed rule changes could be issued by the end of 2011, and become effective in 2012.
If you'd like more information, contact Rob Hazel at firstname.lastname@example.org
© 2011 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.
This advice is not intended or written to be used for, and it cannot be used for, the purpose of avoiding any federal tax penalties that may be imposed, or for promoting, marketing or recommending to another person, any tax related matter.